CISR Insuring Commercial Property
UPDATED ACTUAL Exam Questions and
CORRECT Answers
The Cohen Foundation has purchased an office building at 3300 University Street. Which of the
following could have an insurable interest in this property?
a. The tenant who is required by lease to insure the building
b. The mortgage company lending the money The Cohen Foundation is using to purchase the
building
c. The owner of the building, The Cohen Foundation
d. All of the above could have an insurable interest. - CORRECT ANSWER - d. All of the
above could have an insurable interest.
Buchholz Tractor Repair purchased a new utility shed for $70,000. By the date a loss occurs, it
has depreciated by $10,000. The replacement cost today is $78,000. What is the actual cash
value of this item?
a. $60000
b. $68000
c. $70000
d. $78000 - CORRECT ANSWER - b. $68000
Ozark Casino has a new building with a value of $500,000. It is currently insured for $400,000
with an 80% coinsurance clause. A fire causes a $20,000 loss to the building. Disregarding any
deductible, how much will Ozark's insurance company pay?
a. $16000
b. $18000
c. $20000
d. $19500 - CORRECT ANSWER - c. $20000
,When both buildings owned by the insured are covered under a single limit of insurance, this is
known as ______________.
a. Specific Insurance
b. Agreed Value
c. Scheduled Insurance
d. Blanket Insurance - CORRECT ANSWER - d. Blanket Insurance
Santa's Workshop, Inc., maintains a consistent inventory of toys throughout the year except for
the months of September through December, when their inventory values double. Which of the
following is the best method of providing sufficient insurance coverage for the four months of
increased inventory values?
a. Inflation Guard option
b. Value Reporting Form
c. Higher policy limits at the inception date of the policy
d. Peak Season Endorsement - CORRECT ANSWER - d. Peak Season Endorsement
If no other insurance applies, which of the following is covered under the unendorsed Building
and Personal Property Coverage Form?
a. Underground pipes, flues, or drains
b. Bridges, roadways, etc.
c. Foundations below the surface of the ground
d. Additions that are in the process of being completed - CORRECT ANSWER - d.
Additions that are in the process of being completed
When other conditions of the Additional Coverage - Preservation of Property have been met, the
Building and Personal Property Coverage Form pays for direct physical damage from
____________________.
a. only the causes of loss described in the Causes of Loss form applicable to the Building and
Personal Property Coverage Form
b. any cause of loss
c. only fire, lightning, explosion, riot or civil commotion, or aircraft
, d. only the causes of loss identified as "Specified Causes of Loss" - CORRECT
ANSWER - b. any cause of loss
Flip Factory Fun World has a building insured for $200,000 on a replacement cost basis and is in
compliance with the coinsurance clause. The building has been vacant for 90 days and sustains a
fire loss of $100,000. Disregarding the policy deductible, the Building and Personal Property
Coverage Form prescribes which of the following as the amount to be paid?
a. The loss is not covered.
b. $85000
c. $50000
d. $100000 - CORRECT ANSWER - b. $85000
The Declarations page of a Commercial Property Policy shows Peter Dragon, Paul Guthrie, and
Mary Mitchell, listed in that order, as the named insureds. The mortgageholder is listed as the
First National Bank. In the event of a non-payment of premium, under the Common Policy
Conditions of an unendorsed policy, the insurance company is required to send notice of
cancellation to:
a. Peter Dragon, Paul Guthrie, Mary Mitchell, and First National Bank
b. Peter Dragon and First National Bank
c. Peter Dragon and Paul Guthrie
d. Peter Dragon, only - CORRECT ANSWER - b. Peter Dragon and First National Bank
Business Income Agreed Value, one of the Optional Coverages in the Building and Personal
Property Coverage Form ________________.
a. substitutes replacement cost for actual cash value in the method of valuation
b. guarantees the amount that will be paid to the insured in the event of a total loss
c. is added by separate endorsement
d. suspends the coinsurance clause - CORRECT ANSWER - d. suspends the coinsurance
clause
Which of the following describes what is sometimes known as an open perils Causes of Loss
form?
UPDATED ACTUAL Exam Questions and
CORRECT Answers
The Cohen Foundation has purchased an office building at 3300 University Street. Which of the
following could have an insurable interest in this property?
a. The tenant who is required by lease to insure the building
b. The mortgage company lending the money The Cohen Foundation is using to purchase the
building
c. The owner of the building, The Cohen Foundation
d. All of the above could have an insurable interest. - CORRECT ANSWER - d. All of the
above could have an insurable interest.
Buchholz Tractor Repair purchased a new utility shed for $70,000. By the date a loss occurs, it
has depreciated by $10,000. The replacement cost today is $78,000. What is the actual cash
value of this item?
a. $60000
b. $68000
c. $70000
d. $78000 - CORRECT ANSWER - b. $68000
Ozark Casino has a new building with a value of $500,000. It is currently insured for $400,000
with an 80% coinsurance clause. A fire causes a $20,000 loss to the building. Disregarding any
deductible, how much will Ozark's insurance company pay?
a. $16000
b. $18000
c. $20000
d. $19500 - CORRECT ANSWER - c. $20000
,When both buildings owned by the insured are covered under a single limit of insurance, this is
known as ______________.
a. Specific Insurance
b. Agreed Value
c. Scheduled Insurance
d. Blanket Insurance - CORRECT ANSWER - d. Blanket Insurance
Santa's Workshop, Inc., maintains a consistent inventory of toys throughout the year except for
the months of September through December, when their inventory values double. Which of the
following is the best method of providing sufficient insurance coverage for the four months of
increased inventory values?
a. Inflation Guard option
b. Value Reporting Form
c. Higher policy limits at the inception date of the policy
d. Peak Season Endorsement - CORRECT ANSWER - d. Peak Season Endorsement
If no other insurance applies, which of the following is covered under the unendorsed Building
and Personal Property Coverage Form?
a. Underground pipes, flues, or drains
b. Bridges, roadways, etc.
c. Foundations below the surface of the ground
d. Additions that are in the process of being completed - CORRECT ANSWER - d.
Additions that are in the process of being completed
When other conditions of the Additional Coverage - Preservation of Property have been met, the
Building and Personal Property Coverage Form pays for direct physical damage from
____________________.
a. only the causes of loss described in the Causes of Loss form applicable to the Building and
Personal Property Coverage Form
b. any cause of loss
c. only fire, lightning, explosion, riot or civil commotion, or aircraft
, d. only the causes of loss identified as "Specified Causes of Loss" - CORRECT
ANSWER - b. any cause of loss
Flip Factory Fun World has a building insured for $200,000 on a replacement cost basis and is in
compliance with the coinsurance clause. The building has been vacant for 90 days and sustains a
fire loss of $100,000. Disregarding the policy deductible, the Building and Personal Property
Coverage Form prescribes which of the following as the amount to be paid?
a. The loss is not covered.
b. $85000
c. $50000
d. $100000 - CORRECT ANSWER - b. $85000
The Declarations page of a Commercial Property Policy shows Peter Dragon, Paul Guthrie, and
Mary Mitchell, listed in that order, as the named insureds. The mortgageholder is listed as the
First National Bank. In the event of a non-payment of premium, under the Common Policy
Conditions of an unendorsed policy, the insurance company is required to send notice of
cancellation to:
a. Peter Dragon, Paul Guthrie, Mary Mitchell, and First National Bank
b. Peter Dragon and First National Bank
c. Peter Dragon and Paul Guthrie
d. Peter Dragon, only - CORRECT ANSWER - b. Peter Dragon and First National Bank
Business Income Agreed Value, one of the Optional Coverages in the Building and Personal
Property Coverage Form ________________.
a. substitutes replacement cost for actual cash value in the method of valuation
b. guarantees the amount that will be paid to the insured in the event of a total loss
c. is added by separate endorsement
d. suspends the coinsurance clause - CORRECT ANSWER - d. suspends the coinsurance
clause
Which of the following describes what is sometimes known as an open perils Causes of Loss
form?
